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3bn needed for pension rescue

The Government’s 20m annual commitment to the scheme for collapsed pension funds is woefully inadequate and it only support a fraction of those who have lost out, says independent pension consultant Dr Ros Altmann.

She says the 20m for the Financial Assistance Scheme would only buy 6,000 a year income for 130 people. Altmann points out that 65,000 workers at firms such as ASW, Dexion, Perivan and IFI have lost most or all of their pensions so the Government pledge falls far short.

Even if the 20m was used to buy non-indexed level annuities of 6,000, only 200 people would benefit, according to calculations made using the FSA’s annuity rate calculator. The 20m a year has been guaranteed by the Government for 20 years, equating to a total of 400m.

Altmann believes the Government’s claims that it cannot finalise the intricacies of how the FAS will work until it has reviewed all the data available, is a fudge aimed at placating backbenchers until after the next election.

She says collating further data is a waste of time and money when thousands of people are affected and the cash spent on carrying out more research would be better spent on the FAS.

Altmann is calling for the Government to commit £75m a year for 40 years, which would amount to £3bn, and to stop schemes in wind-up from buying annuities.She says: “We already know that thousands of people are affected. Most long-serving members have lost more than £6000, so £2m a year could just give a tiny number of people a fraction of their pensions. The injustice will remain.”

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